U.K. investors face an April 6 deadline to add cryptocurrency ETNs to their tax-free Individual Savings Accounts (ISAs). After this date, the tax authority, His Majesty's Revenue and Customs (HMRC), will reclassify crypto ETNs, restricting them to Innovative Finance ISAs (IFISAs).
ISAs allow individuals to save up to £20,000 annually tax-free. The recent lifting of a ban on retail investors accessing crypto ETNs was seen as a significant step for crypto adoption, offering the possibility of inclusion in everyday investment products like ISAs.
However, limiting crypto ETNs to IFISAs will effectively end this opportunity, as mainstream investment platforms do not offer them. The HMRC cited the "innovative nature" of crypto ETNs and their status as an emerging market for the decision, though they will review the ruling later.
This move risks making the U.K. an outlier in global markets, where exchange-traded products (ETPs) have broadened access to crypto investments. Experts suggest reconsidering the decision to allow access through more widely used stocks and shares ISAs.